Stop Building Dumb Stuff

Non-profit folks sometimes tease me about tech entrepreneurs building useless stuff. (I’m the token techie at a lot of conferences.) But really, non-profits aren’t much better. So often, we just put in bandaids.

How long did it take us to find a malaria vaccine? We’re so close. Mosquito nets are great, but what if we’d really taken a chance and thrown our weight behind a vaccine earlier?

A few days ago, I attended Seattle’s 2nd-annual Social Innovation Fast Pitch. Nathan Myhrvold, former CTO of Microsoft and the keynote speaker, came out guns blazing:

It’s great you can kill aliens with Xbox at a faster rate than ever before, but we didn’t really need our lives changed. The fact is, there are people who do need their lives changed.

You know something? Most of your ideas will fail and I’m completely OK with that.

Whatever you think of sometimes-controversial Nathan (he’s also the CEO of Intellectual Ventures, which has an aggressive patent stance), this is something near and dear to my heart. And he’s dead right.

When I was starting Vittana in 2008, I remember getting laughed out of several meetings. “This’ll never work,” people said. “If I give you money and you fail, that means I wasted my $1,000 — I could’ve given to Red Cross instead and been sure of impact.” (It turns out education does work and it’s hard to be sure.)

Nathan and I got a chance to talk for a few minutes before his keynote. He’s a razor-smart guy (obvious, really — not anyone ends up Microsoft’s CTO) and I’m excited he’s challenging folks to think differently. A bit of our discussion:

Yes, there’s a direct cost of failure. But, there’s also the opportunity cost of not trying. Looking for a malaria vaccine might be riskier than simply buying a mosquito net, but once you find the cure, you’re done — once and for all. But, if you never try, you’ll be buying mosquito nets forever.

If you never put down a big bet, you’ll never change the world. It’ll just stay the exact same place. What’s the point of that?

And let’s not even get started about trying to build (another) link shortener. For-profit, non-profit, B-corps — it’s tax status, not religion. Anyone can build cool stuff.

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17 thoughts on “Stop Building Dumb Stuff”

I’d love to agree, but it’s easier said than done. Not everybody is in the position to take big risks for big bets. You need to pay the rent, a car, maybe even nourish a family already. And few of us have a father willing to send us money if we fail after three years of trying without any income. Also, not everybody is a born rocket scientist, most IT entrepreneurs are probably only average computer scientists, good enough to program a web app, but hardly good enough to program the revolutionary next operating system or to build the next iPhone.

I suspect that the whole “take bigger risks, stupid!” advices stem from venture capitalists, not from other founders or entrepreneurs. As for VCs, it makes perfect sense to burn-down 19 startups/entrepreneurs (i.e. their risky strategies failed) if one of 20 becomes the new Google, Apple or Facebook. It’s the more lucrative investment strategy for them as the venture capital business is not about making 1.25 Dollar of a 1 Dollar investment within 3 years, it’s about making 100 Dollar from a 1 Dollar startup investment (IOW, they can easily afford the total loss of 19 Dollars, they still have a 500% portfolio performance. Those poor 19 startup guys who lost their whole invested own money plus 3 years of blood, sweat and tears wished they went for a smaller, less risky “dumb” bet in retrospective. As like this, 90% of them would have at least been able to stay afloat somehow and have the chance to try something new after a while. Those 19 who failed at high risk bets however likely won’t be able to try again, as they even lack the money and motivation for a moderate start.

VCs can reduce their risks by diversifying their investments, i.e. investing in 20 high-risk bet companies AT THE SAME TIME. A startup entrepreneur can’t do this, he has to focus on his own high-risk bet company and can only pursue one idea at a time. Big difference!

So, my advice as a startup entrepreneur to fellow startup entrepreneurs would be: Instead of starting with a big bet, rather start with building something dumb first that allows you to get ramen-profitable. This will buy you time and money and make you confident to take a bigger risk at the next venture, without the need to put ALL your money and time on a SINGLE high-risk bet.

Sebastian (just below) clarified wonderfully on my behalf. (Thanks Sebastian!) There are lots of things IMHO that aren’t expensive (and certainly not any more expensive than any other startup idea) that could really matter.

I’m also certainly not a high-flying VC — I’m fighting the good fight with my team, one day a a time, just like everyone else. In fact, I’m a social entrepreneur: I run a non-profit. (This one!) There’s startup lean and then there’s non-profit startup lean. 😉

I agree with much of what you say, but – sometimes-controversial? Please. His company IV is nothing but the biggest patent troll of the bunch. Such a thing is arguably a factor in why people don’t take big investment risks on things that actually matter.

I agree with your point, but disagree with what you imply about mosquito nets. There’s the opportunity cost of lives lost due to lack of net funding if you fund a malaria vaccine instead, and given the incredible effectiveness of nets where they’re deployed I find it unconscionable to stop funding them to fund an inherently risky vaccine venture.

Eenog — thank you for this! 🙂 I read the Hamming note years ago, both when I worked in research and then later when I was starting Vittana. It’s a beautiful talk. I’m saving it for a post of its own someday.